Online gambling has come a long way in the last 20 years and is showing no signs of letting up, making fraud prevention more important than ever.
Online gambling has been on a tear since the mid 1990’s when the Internet’s first two gambling sites – GamingClub and InterCasino – opened for business. Back in 1996, there were 15 online gambling sites. In a flash, that number mushroomed to 200 with revenues reaching $830 million in 1998.
A recent Research and Markets report predicts the online gambling market in the U.S. to grow at a compound annual growth rate (CAGR) of 51.71% during the period 2016-2020. According to the report, “one of the key drivers for market growth will be the popularity of online gambling.”
In the words of contributing analysts, “the popularity of computing and mobile devices, especially among the younger generation, is the main reason for the extended reach of online gambling in the U.S..”
How does this translate into revenue, you ask? Business Insider states four of the top mobile casino apps generated more than $645 million in revenue in 2015 alone. It would be an understatement to say that this is no small chunk of change.
Naturally, where there is smoke, there is fire. In this case, fraudsters are warming up to opportunities to game the system. In Europe and Southeast Asia, for example, online gambling remains the top Internet-related card fraud problem. According to Research Solutions Inc., (RSI):
"The amount of revenue is so massive it is almost unbelievable. Europay (MasterCard’s sister partner representing the EU marketplace) has disclosed that over twenty percent of all online financial frauds can be attributed to online (virtual) gambling."
Feeding the Fraudsters' Fire
One of the biggest challenges for online gambling operators is the fact that the cybercriminal breeding ground reaches far and wide, encompassing Dark web markets and forums that tout ebooks and tutorials geared toward crooks ranging from bad actor “wannabes” to cybercriminal crackerjacks.
Fraud feeding informational morsels that can be found on the Dark web, for example, include things like a list of cardable (susceptible to fraud) casino websites that accept credit cards or PayPal as a deposit, and a tutorial for carding online casinos, just to name a few.
Suffice it to say that, as long as online gambling keeps up the momentum, cybercriminals will be eyeballing profit potential, and punching up their game plan to cash out stolen credit cards and hijack consumer accounts, all while sharing intel within miscreant fraud rings.
The Winning Hand for Beating Fraudsters
When it comes to online gambling operations, RSI summarizes the keys for ongoing success as:
- Customer security
- Prompt mitigation and resolution of problems
- Clear customer requirements, regulations and customer support/problem resolution
- A currently maintained and highly aggressive anti-fraud and anti-threat strategy, methodology and policies, coupled with properly trained personnel
- A current Common Operations Picture (COP) methodology with ongoing “unpredictable” auditing and standard auditing operations
- Preparation and challenging of what-if scenarios formulated around the potential weak points of the operation
- Full-time monitoring of regulatory requirements and laws
- New auditing and automated systems integrated with constantly reevaluated manual and managerial policies and procedures
Whether fraud is committed via account takeover, stolen credit cards, money laundering, promotional abuse or other nefarious methods, online gambling’s rising popularity and astounding market growth are sure to entice record numbers of cybercriminals in 2017.
The good news is, iovation is ready to help operators strengthen their defenses with our proven Fraud Prevention service and force online gambling fraudsters to fold.
Come see us at ICE Totally Gaming 2017
ICE Totally Gaming 2017 is just a few short weeks away, and we couldn't be more thrilled to be heading back to London. If you're planning to attend, please make sure you set aside some time to visit us at booth N8-338. Better yet, book a meeting with us ahead of time.
We look forward to seeing you in London!